Digital distribution isn't free
Over the past couple of days, I've read a couple of great pieces about the digital delivery of written content.
Tim O'Reilly mines his own data and experiences to talk about the economics of e-books. Scott Karp at Publishing 2.0 follows up with "The Future of Print Publishing and Paid Content," in which he considers what people are paying for or what they think they're paying for when they buy a newspaper:
For many people who paid for print publications, including newspapers, magazines, and books, a significant part of the value was in the distribution. That DOESN'T mean people don't value the content anymore. It means that the value of having it delivered to their doorstep every morning, or having it show up in their mailbox, or carrying it with them on a plane--in print--has CHANGED because of the availability of digital distribution as an alternative.
The problem for people who sell printed content is that the value of the distribution and the value of the content itself was always deeply intertwined--now it's separable.
People ARE willing to pay for certain digital content, but they AREN'T willing to pay for the distribution--specifically, not the analogue distribution premium.
I think he's spot on. In fact, I might go a little further.
We're largely talking subconscious mental math here, so I don't claim this to be an exact analysis. But I'm going to posit that most people act as if the following are true:
- Most of what you're paying for when you buy a printed book is the physical medium and its distribution.
- The cost of digital distribution is close to zero.
There's some truth in these generalizations, but my guess is that they're not as true as most people think.
There are these costs: marketing, editing, publisher profit, the money to cover everything that isn't a bestseller, etc. These things aren't distribution, but they really aren't content value either. So they tend to get lumped with "not content value" that doesn't need to get paid for in a digital world. However, much of it does need to get paid for.
At the same time, when I last looked, big server infrastructures didn't grow on trees and neither did the bandwidth and the people needed to make use of them.
Implicit assumptions that digital distribution is essentially free are commonplace. Those would be wrong. It may be cheaper depending upon the details of what type of content we're talking about exactly. (Video demands more infrastructure and bandwidth than books, for example.) But free? Nope.
Anyway, Eric has a handful of these editorials, and in one of them (either Prime Palver 6 or 7???) he discusses and shares the economics of paper publishing. Although Eric is a big promoter of e-books, he points out that the cost of physically printing books is not as high as many believe.
The source of this writing tends to lend the editorial a bit of creditability. After all, Eric is not a p-book apologist. I might suspect him of trying to justify higher e-book prices, but that is clearly not the case since Baen's e-book prices are the most reasonable I have found on the net. Surely, you can't blame the FREE library with being over priced.
Michael
While there are some products like 3DIssue.com that allow you to create your own digital publications in-house, the majority of publishers who post digital editions of their print publications are using digital magazine production companies to convert their print mags / newspapers into digital editions.
I think there will be a shift shortly that will reduce the cost of digital distribution to the digital reader, signigficantly as publishers embrace targeted dynamic advertising in their digital editions. Where the cost of distribution and perhaps even the cost of sale is passed to the advertiser rather than the digital consumer.
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